Klaytn Foundation, established to build and decentralize the ecosystem of South Korea’s leading Layer 1 blockchain Klaytn, has teamed up with Finschia Foundation, the operator of the Finschia blockchain developed by LINE Tech Plus, to propose the merger of the two existing blockchains into a new mainnet. The two blockchain foundations will submit the integration proposal to their respective governance members today to open up the proposal for discussion, and voting will take place from 26 January till 2 February 2024.
The proposal aims to create a new industry leader with a technologically superior blockchain that supports both EVM and CosmWasm, as well as one of the largest ecosystems of DApps and users in Asia. The two foundations will also merge into one organization, combining their technology, services, and business networks which include Kakao, LINE, and many other strategic partners.
The creation of Asia’s largest Web3 ecosystem
The proposed merging of Klaytn and Finschia, the de-facto Web3 leaders in South Korea and Japan respectively, will create Asia’s largest Web3 ecosystem with a massive user base of over 250 million1 digital wallets interacting with more than 420 DApps. The new mainnet will inherit Klaytn’s integration with Kakaotalk and Finschia’s integration with LINE—both leading messaging platforms used across Asia—bringing a user-friendly, integrated Web3 experience straight into the phones of hundreds of millions of users.
Post-merge, the unified foundation will continue to pursue ecosystem expansion in the RWA tokenization, GameFi and DeFi verticals through collaborations with Japanese, South Korean, and Southeast Asian partners, while continuing to develop messenger-based Web3 services and the digital commerce platform. With access to every Kakaotalk and LINE user, the new public blockchain will also act as a springboard for Asia’s IT and entertainment enterprises. Last but not least, the merger will also create the largest Web3 business network in Asia.
Should the proposal pass both Klaytn and Finschia’s governance voting processes, the two foundations will immediately begin work on the chain merge, as well as the following business initiatives:
Infrastructure development to enhance accessibility for institutional investors, Strengthening of the DeFi infrastructure and launch of a native stablecoin, Discovery and onboarding of AI-based DAp, Enhancing the onboarding infrastructure for Web2 companies to bring their digital items, memberships, ticketing platforms and more on-chain, Onboarding of top-tier Japanese gaming companies and Web3 projects featuring global IP, Cultivating of communities of holders, developers, and partners in each Asian country.
Improved tokenomics focused on sustainable value creation
With the chain merge, KLAY and FNSA, the native coins of the two blockchains, will be replaced by a new native coin which will be issued based on the combined total amount of KLAY and FNSA. Holders of KLAY and FNSA will be able to swap for the new native coin upon issuance.
Drawing on the combined experience of both foundations, the proposed tokenomics for this new native coin will focus heavily on delivering sustainable value creation. This will be achieved via a lower base inflation rate and a 3-layer burning model designed to drive the coin towards deflation as network activity increases.
Additionally, 24% of the new coins issued—equivalent to the bulk of non-circulating KLAY—will be immediately burned to implement Zero Reserve Tokenomics, providing holders with greater certainty. Instead of operating off of reserves, the new foundation will operate transparently via an ecosystem fund and an infrastructure fund that are continuously replenished via block rewards.
Enhanced governance, decentralization, and interoperability
Klaytn’s and Finschia’s governance members will also be merged, creating Asia’s largest decentralized Web3 governance structure comprising 45 leading global enterprises with the capacity to expand up to 100 governance members. Permissionless validation is also planned for the new blockchain, allowing anyone to participate as a network validator, enhancing openness and security.
Additionally, with support for both EVM and CosmWasm, the merged blockchain will be accessible to both Ethereum and Cosmos builders, leveraging the technological advantages of each while enabling greater interoperability between the two ecosystems.
“We are excited to be taking the first step toward unlocking the enormous synergy of merging the public blockchains started by Kakao and LINE, which are both leading IT companies in Asia,” said Klaytn Foundation and Finschia Foundation. “We will give our best to make this merge an opportunity to innovate and lead the Asian blockchain industry in both technology and adoption.”
To address questions regarding this proposal, representatives from the two foundations will be speaking at the upcoming Klaytn Community Town Hall scheduled on Friday, 19 January 2024. More information on this Town Hall will be shared on the official community and social platforms of Klaytn and Finschia Foundation.
